Question

The owners of a private company wish to dispose of their entire investment in the company....

The owners of a private company wish to dispose of their entire investment in the company. The company has an issues share capital of 1 million € of a 0.50 € nominal value ordinary shares. The owners have made the following valuations of the company’s assets and liabilities.

Million €

Non-current assets, book value

30

Current assets

18

Non-current liabilities

12

Current liabilities

10

The net realisable value of the non-current assets exceeds their book value by 4 million €. The current assets include 2 million € of accounts receivable which are thought to be irrecoverable.

What is the minimum price per share which the owners should accept for the company?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
No of Shares Outstanding of a Company
= Share Capital Issued / Nominal Value Per Share
= €1000000 / €0.50
= 2000000 Shares
Market Value of Company
= Net realisable value of non current assets + Current assets excluding irrecoverable
- Non Current Liabilities - Current Liabilities
= (€30000000+€4000000) + (€18000000-€2000000) - €12000000 - €10000000
= €34000000 + €16000000 - €12000000 - €10000000
= €28000000
So,
Minimum Price Per Share
= Market Value of Company / No of Shares outstanding
= €28000000 / €2000000
= €14
Minimum Price Per Share that owners should be accepted = €14
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In late July 2017, Bramble Ltd., a private company, paid $2.10 million to acquire all of...
In late July 2017, Bramble Ltd., a private company, paid $2.10 million to acquire all of the net assets of Sheffield Corp., which then became a division of Bramble. Sheffield reported the following statement of financial position at the time of acquisition: Current assets $415,000 Current liabilities $300,000 Non-current assets 1,335,000 Long-term liabilities 265,000 Shareholders’ equity 1,185,000 $1,750,000 $1,750,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Sheffield was...
XYZ Company had $50 million in owners’ equity at the start of 2017. A million shares...
XYZ Company had $50 million in owners’ equity at the start of 2017. A million shares were outstanding then, with a price at 20% premium to book value (i.e., market value-per-share is 20% above book value-per-share). What were its market value and book value; market value-per-share and book value-per-share? XYZ earned $10 million in (after-tax) profits during 2017. What was its ROE and earnings-per-share (eps)? XYZ retained $5 million of its 2017 earnings. Suppose the company makes the same profits...
The owners of H.M. Hornes Company are several wealthy Texans the company earned $ 3.5 million...
The owners of H.M. Hornes Company are several wealthy Texans the company earned $ 3.5 million after taxes this year, with 1.0 Million shares outstanding, earnings per share were $ 3.50, shares have recently been sold at $ 72.00 among current shareholders . Two dollars of this value are explained by the anticipation of investors of a cash dividend. As Financial Manager of H.M. Hornes, you have completed the alternative of repurchasing some of the company's ordinary shares with an...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for $256,900. On this date, Salem Company had common stock of $210,300 and retained earnings of $128,400. An examination of Salem Company’s balance sheet revealed the following comparisons between book and fair values: Book Value Fair Value Inventory $29,600 $34,800 Other current assets 50,100 55,100 Equipment 303,400 347,200 Land 196,800 196,800 (a) Determine the amounts that should be allocated to Salem Company’s assets on the...
The statement of financial position of Soorkee Company as of December 1, 2011 had book and...
The statement of financial position of Soorkee Company as of December 1, 2011 had book and fair market values as shown below: Book Value Fair Value Current Assets P240 000 P280,000 Land 20,000 100,000 Building and Equipment (net) 400,000 270,000 Patents 10,000 30,000 Total Assets P670,000 P680,000 Liabilities P250,000 P250,000 Ordinary Share Capital 100,000 Accumulated Profits 320,000 430,000 Total Liabilities and Shareholders’ equity P670,000 P680,000 On December 1, 2011, Pulaskee Company purchased all of Soorkee Company’s share for P600,000. Required:...
7. On January 1, Year 5, FLA Company issued 6,300 ordinary shares to purchase 9,000 ordinary...
7. On January 1, Year 5, FLA Company issued 6,300 ordinary shares to purchase 9,000 ordinary shares of MES Company. Prior to the acquisition, FLA had 180,000 and MES had 10,000 ordinary shares outstanding, which were trading at $5 and $3 per share, respectively. The following information has been assembled for these two companies just prior to the acquisition:     FLA Company MES Company Carrying Amount Fair Value Carrying Amount Fair Value Plant assets $ 60,000 $ 70,000 $ 20,000...
Express your answers in strictly numerical terms Round each answer to the third decimal space. A-...
Express your answers in strictly numerical terms Round each answer to the third decimal space. A- "Last Year, a corporation had a book value of equity of $400 million of USDs, 5 million shares outstanding, and a market price of $45 per share. The corporation also had cash of $5 million of USDs, and total debt of $300 million USDs. What was the corporation's market capitalization, in million USDs? Note: Express your answers in strictly numerical terms. " B- "Last...
On May 1, Donovan Company reported the following account balances: Current assets $ 101,000 Buildings &...
On May 1, Donovan Company reported the following account balances: Current assets $ 101,000 Buildings & equipment (net) 234,000 Total assets $ 335,000 Liabilities $ 38,000 Common stock 150,000 Retained earnings 147,000 Total liabilities and equities $ 335,000 On May 1, Beasley paid $474,600 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $17,600 in accounts payable for legal and...
A company entering liquidation has reported assets with a book value of $200,000 and a liquidation...
A company entering liquidation has reported assets with a book value of $200,000 and a liquidation value of $120,000, and previously unreported software that it estimates it can sell for $25,000. It has reported liabilities with a book value of $180,000, and believes it is probable that it can negotiate the payments down by 25%. The company's net assets, reported on its statement of net assets in liquidation, are A $(35,000) B $20,000 C $(15,000) D $(60,000) Inho Corporation has...
Suppose the Schoof Company has this book value balance sheet: Current Assets: $30,000,000                          Current Liabili
Suppose the Schoof Company has this book value balance sheet: Current Assets: $30,000,000                          Current Liabilities: $20,000,000 Fixed Assets: $70,000,000                              Notes Payable: $10,000,000 Total Assets: $100,000,000                             Long Term Debt: $30,000,000                                                                         Common stock (1 million shares): 1,000,000                                                                            Retained Earnings: $39,000,000                                                                         Total liabilities and equity: $100,000,000 The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT